Proposed NY property tax cap short-sighted solution

In the coming weeks, the governor plans to enter into legislation a cap that would apply to all school districts, as well as local governments. Designed to protect property owners from skyrocketing property taxes, the cap prevents an increase in any district’s tax levy (amount raised through property taxes) above 2 percent or the rate of inflation, whichever is less. However, with a 60 percent majority, residents have the ability to override the cap during budget elections.

While this is good news to property owners, district administrators find the solution shortsighted.

“A cap is a rather blunt instrument to control costs,” said James Rodems, assistant superintendent for management services with the Baldwinsville Central School District. “It is an easy political fix to rising taxes. What it doesn’t consider is the fact that some of these cost increases, especially pensions and health insurance, are outside of our control.”

Other factors driving up costs are mandates imposed onto school districts by the state.

“I work with a very talented group of people to manage the effects of mandates on the district’s educational programs. We have to comply with the various laws and that is what mandates are, laws,” Rodems said.

District expenses such as facilities’ maintenance and union contracts are increased by state mandates. For examples, the Tribourough Agreement requires expired union contracts to remain whether or not a new agreement has been negotiated, and the Wicks Law forces districts to have multiple construction contracts.

“It has been estimated [Wicks Law] increases a building project by 10 to 20 percent,” Rodems said.

Other mandates include paying prevailing wages to outside contractors and pollution control compliance for buses, which adds $10,000 to the cost of every new bus.

The mandate issue has not gone unrecognized at the state level. In fact, Gov. Cuomo recently formed a Mandate Relief Redesign Team charged with reviewing existing unfunded and underfunded mandates imposed by New York State.

“The enormous burden of unfunded and underfunded mandates is breaking the backs of taxpayers, counties and municipalities across the state,” Gov. Cuomo said.

New York State Senator David Valesky agrees mandate relief is needed.

“[The tax cap] has to be accompanied by real mandate relief because many of our local governments and school districts simply cannot continue operating under the status quo,” he said during a Jan. 11 state of the area forum in Cazenovia. “The revenue is just simply not going to be there for the State of New York, and we have to do things differently at all levels of government.”

While the cap will improve the quality of life for residents, the long-term effect may lead to inferior educational programs unless mandates and other state level issues are addressed and rectified.

“Unless state aid is re-organized to enhance equity, I think the net effect of a cap will be to reduce opportunities for students,” Rodems said. “Seventy-five percent of our costs are employee related. Over time, as districts are forced to meet the demands of a cap, the public vote and reduced state aid, educational programs will be affected.”

“We need to work to ensure that we have a good educational product for our students and community – that we graduate young men and women ready for the world. We cannot forget that we are in the ‘kid business.’ Losing our student focus in all of this would be a tragedy.”

Staggering statistics

Unfunded and underfunded mandates drive up costs of schools, municipalities and the property taxes that support them. Due in part to these mandates, New York now has some of the highest taxes in the nation. For example:

New York has the second highest combined state and local taxes in the nation and the highest local taxes in America as a percentage of personal income – 79 percent above the national average;

Median property taxes paid by New Yorkers are 96 percent above the national median;

Property tax levies in New York grew by 73 percent from 1998 to 2008 – more than twice the rate of inflation during that period;

When property taxes were measured as a percentage of home value in 2009, nine out of the top ten counties in the nation were all in Upstate New York.